Talking to The Financial Express on the margins of a press conference to announce the launch of its second software design centre here, Ericsson Communications managing director, Anil Raj said discussions were already on with two companies for a sizeable stake in them.

"We are still some way off from formalising the deals", he said without divulging the names of the companies. However, we are very much open to idea of significant equity participation if not the takeover of such startups that are mushrooming in cities like Hyderabad, he said.

Later this year Ericsson will be launching a new mobile phone with Internet capability to be followed by products that will incorporate e-commerce facilities such as e-cash, Raj said.

"It is our ambition that the Hyderabad centre becomes the core IP competence centre within Ericsson by the end of the year", the senior executive of the Swedish telecom multinational told ceremony attended by chief minister N Chandrababu Naidu to mark the inaugural of the centre.

While the software design centre in Bangalore which was set up in 1997 works on GSM and radio technologies, the Hyderabad centre would work exclusively on IP and other Internet technologies such as routers, remote access servers, ATM switches, cable modem technology and voice over IP, he said. u"The Hyderabad centre will provide a major thrust in our efforts to develop cutting-edge products for the global market", Raj told the press conference earlier.

Starting off with 35 engineers the centre in Hyderabad is expected to employ close to 100 developers by the middle of year 2000, Ericsson officials said. At the same time Ericsson Communications is also working on trails to enter the CDMA technology in the local loop in projects for the MTNL and Shyam Telecom in Rajasthan, when asked if the company was looking at the segment with the entry of MTNL with its own mobile phones.

Though CDMA in the local loop could be a good alternative for the lower end o the market, GSM will continue to dominate as it more appropriate for broader bandwidth usage such as Internet connectivity, he said.